Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Neff Corp (1617667) 10-Q published on Aug 03, 2017 at 5:10 pm
Reporting Period: Jun 29, 2017
On July 14, 2017, the Company and H&E Equipment Services, Inc. ("H&E") announced that they had entered into a definitive merger agreement under which H&E will acquire Neff Corporation. Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, H&E will pay $21.07 in cash per share of Neff common stock, for a total enterprise value of approximately $1.2 billion which includes approximately $690 million of debt. The per share merger consideration payable to Neff stockholders is subject to certain downward adjustments, not to exceed $0.44 per share, in the event that H&E incurs certain increased financing costs due to the transaction not being consummated on or prior to January 14, 2018. The merger transaction is subject to a go-shop period that will expire on 11:59 p.m. on August 20, 2017 during which the Company has the right to solicit, encourage or facilitate any inquiry or the making of any alternative acquisition proposal. The transaction is expected to close in the late third quarter or early fourth quarter of 2017, and is subject to customary closing conditions including Hart-Scott-Rodino Act clearance. In the event that the Company terminates the Merger Agreement in accordance with the go-shop provision described above to enter into a definitive agreement for a superior proposal, the Company will be required to pay H&E a cash termination fee in the amount of $13,165,000. In the event that the Company terminates the Merger Agreement under certain other specified circumstances, the Company will be required to pay H&E a cash termination fee in the amount of $18,430,000.
On July 14, 2017, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with H&E Equipment Services, Inc. (“H&E”) and Yellow Iron Merger Co, a wholly-owned subsidiary of H&E (the “Merger Sub”) pursuant to which the Merger Sub will be merged with and into Neff Corporation with Neff Corporation continuing as the surviving corporation and as a wholly-owned subsidiary of H&E (the “Merger”). Under the terms of the Merger Agreement, which has been unanimously approved by our board of directors and the board of directors of H&E, H&E will pay $21.07 in cash per share of our Class A Common Stock, for a total enterprise value of approximately $1.2 billion, including approximately $690 million of net debt. The per share merger consideration payable to our stockholders is subject to certain downward adjustments, not to exceed $0.44 per share, in the event that H&E incurs certain increased financing costs due to the transaction not being consummated on or prior to January 14, 2018. Holders of vested stock options to purchase shares of Class A Common Stock shall receive an amount of cash equal to the product of the merger consideration minus the per share exercise price multiplied by the number of shares of Class A Common Stock subject to such stock option. Holders of vested restricted stock unit awards shall receive an amount of cash equal to the product of the merger consideration multiplied by the number of shares of Class A Common Stock with respect to which such restricted stock unit award was vested. Holders of unvested stock options shall receive a substitute stock option to purchase H&E common stock as set forth in the Merger Agreement. Holders of unvested restricted stock unit awards shall receive time-vesting restricted stock unit awards of H&E common stock as set forth in the Merger Agreement.
The Merger is subject to a go-shop period that will expire on 11:59 p.m. on August 20, 2017 during which we have the right to solicit, encourage or facilitate any inquiry or the making of any alternative acquisition proposal. The Merger is expected to close in the late third quarter or early fourth quarter of 2017, and is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR"). The Merger Agreement contains certain customary termination rights, including that each of H&E and Neff Corporation has the right to terminate the Merger Agreement after January 14, 2018 if the Merger has not been consummated provided that if all of the conditions to closing have been satisfied other than having obtained HSR clearance, each of H&A and Neff Corporation may extend such outside date to April 10, 2018. In the event that we terminate the Merger Agreement in accordance with the go-shop provision described above to enter into a definitive agreement for a superior proposal, we will be required to pay H&E a cash termination fee in the amount of $13,165,000. In the event that we terminate the Merger Agreement under certain other specified circumstances, we will be required to pay H&E a cash termination fee in the amount of $18,430,000.
In connection with the transaction, Wayzata Opportunities Fund II, L.P. and Wayzata Opportunities Fund Offshore II, L.P. (collectively, the “Key Holders”), the beneficial owners of 14,951,625 shares of the Class B Common Stock, entered into a support agreement with H&E pursuant to which the Key Holders agreed to vote all of their shares of Company common stock against any action or agreement that is intended to prevent, interfere with, impair or delay the Merger but they are permitted to engage in go-shop activities to the extent those activities are permitted by us under the agreement. Additionally, the Key Holders entered into an exchange and termination agreement with Neff Corporation, H&E and Neff Holdings and the holders of options convertible into LLC units of Neff Holdings entered into an exchange and termination agreement with Neff Corporation, H&E, Neff Holdings and the management representative (as defined in the exchange and termination agreement) pursuant to which the Tax Receivable Agreement will be terminated immediately prior to the effective time of the Merger without any payment by us. Pursuant to the exchange and termination agreements, immediately prior to the effective time of the Merger, the Key Holders will receive shares of Class A Common Stock in exchange for the number of LLC units of Neff Holdings they own on a one-for-one basis and their shares of Class B Common Stock will be cancelled, and the holders of options convertible into LLC units of Neff Holdings will have their LLC options converted on a cashless basis into LLC units and the LLC units will be exchanged for shares of Class A Common Stock on a one-for-one basis.
On July 14, 2017, we entered into the Merger Agreement with H&E and Merger Sub pursuant to which H&E will acquire Neff Corporation. The Merger is subject to a number of conditions to closing, including (i) no temporary restraining order, preliminary or permanent injunction or other law or order shall have been issued (and remain in effect) by a court or other governmental entity having the effect of making the Merger illegal, enjoining or otherwise prohibiting the consummation of the Merger or the other transactions contemplated by the Merger Agreement, and (ii) the expiration or termination of the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. If any of these closing conditions or the other closing conditions are not met or waived, we will not be able to complete the Merger. As a result, there can be no assurance that the Merger will be completed in a timely manner or at all.
The Merger Agreement provides us with a go-shop period that will expire on 11:59 p.m. on August 20, 2017 during which we have the right to solicit, encourage or facilitate any inquiry or the making of any alternative acquisition proposal. In the event that the Company terminates the Merger Agreement in accordance with the go-shop provision to enter into a definitive agreement for a superior proposal, we will be required to pay H&E a cash termination fee in the amount of $13,165,000. In the event that we terminate the Merger Agreement under certain other specified circumstances, we will be required to pay H&E a cash termination fee in the amount of $18,430,000.